Freight Shipping between US and Bangladesh | Rates – Transit times – Duties and Taxes

How to calculate duties & taxes when importing from US to Bangladesh?

Getting a clear picture of the customs duties and taxes when importing goods from the US to Bangladesh involves juggling several important pieces of information. To pinpoint just how much you'll need to set aside for these costs, you must have a comprehensive understanding of the country of origin, the Harmonized System (HS) Code, the Customs Value, the Applicable Tariff Rate, and be aware of any additional taxes and fees that might apply to your goods.

Begin your journey to mastering the art of customs duties and taxes calculation by first ensuring you know where your wares were born - the country in which your goods were produced or manufactured. This knowledge not only forms the foundation of your duties estimating process, but it also helps in tackling future shipping scenarios.

Step 1 - Identify the Country of Origin

Identifying the country of origin is a no-brainer but let's take a deeper look at why it's that important. First off, the trade agreements. The U.S. and Bangladesh engage in multiple treaties like the Generalized System of Preferences (GSP) which can significantly affect your tax rates. Second, it aids in confirming the tariff classification. HS codes vary on items manufactured in different nations.

Thirdly, the country of origin impacts the import restrictions. In Bangladesh, certain goods like second-hand items from the US may be restricted. Fourth, it impacts the calculation method of duties. The country of origin plays a role determining the calculation method for VAT and other dues. Finally, it allows accurate customs value declaration.

Now, you're wondering how these bilateral trade agreements impact the duties. Well, under GSP, certain goods can be exported to Bangladesh at reduced or zero tariffs. This is mutual, aiding both economies. However, this is just the tip of the iceberg, each good might interact differently with these agreements.

To make your shipping process seamless, always, always verify the import restrictions beforehand. Imagine your shipment gets stuck at Bangladeshi customs since you didn't check the rules of importing used machinery. Keep your homework on point, and you'll sail (or fly) through!

Step 2 - Find the HS Code of your product

The Harmonized System (HS) Code, or Harmonized Commodity Description and Coding System, is an international standard for classifying traded products. It's used by customs authorities around the globe to identify products in order to apply tariffs and track international trade statistics.

Typically, the easiest way to obtain the HS Code for your particular product is to consult with your supplier. Given their experience in the industry, they're likely equipped with the appropriate knowledge and understanding of the relevant regulations associated with the products they're providing.

Should this method prove unfruitful, fret not. You can also identify the HS Code on your own by following a simple sequence of steps. First, go to the Harmonized Tariff Schedule to utilise their lookup system. You can then enter the name of your product in the search bar provided. The corresponding HS Code can be located in the Heading/Subheading column for your product.

A word of caution: please ensure the HS Code selected is indeed the correct one. Any inaccuracies may result in shipment delays and other potential administrative adjustments, including fines.

Here's an infographic showing you how to read an HS code. By following these steps, you'll be well on your way in the world of international trade.

Step 3 - Calculate the Customs Value

It's easy to confuse product value and customs value when you're getting ready to import goods from the US to Bangladesh. Think of the customs value as an extended version of your transaction value.

So instead of just the amount paid for your goods, it's the goods' price plus the cost of international transportation and the insurance cost. In technical terms, this equation is referred to as CIF (Cost, Insurance, and Freight). Let's break it down with a simple example:

Imagine a toy manufacturer in the US sells you a batch of toys for $10,000. The freight charges come to $2,000 and insurance is $500. Your CIF customs value then stands at $12,500 ($10,000 merchandise value + $2,000 freight + $500 insurance). This CIF value will be used as the basis for calculating the customs duties when the goods arrive in Bangladesh. Keep these calculations handy, they'll be a crucial part of the customs clearance process!

Step 4 - Figure out the applicable Import Tariff

An import tariff is essentially a tax imposed by the importing country's government on goods imported from other countries. It is typically calculated based on the type of goods and their value, to regulate commerce and protect domestic industries. In Bangladesh, tariffs on the import of goods from the U.S. are usually based on the Harmonized System (HS) coding of the product.

To determine the correct tariff for your product, you can check with the Bangladesh Customs official website or other reliable trade facilitation portals. Here's a simple guide:

1. Enter the HS code for your product (let's assume it's 6109.10, cotton T-shirts).
2. Select the country of origin (in our case, the U.S.).
3. Cross reference with the tariff rate schedule provided on the website.

Let's imagine you import a shipment of cotton T-shirts, valued at $20,000. If the Tariff rate is 25%, and your Cost, Insurance, and Freight (CIF) charges amount to $1,000, your import duties will be calculated on a total of $21,000 (value of goods + CIF). Hence, your import duties will be 25% of $21,000, which equals to $5,250. Keep in mind that this is a simplified example and actual calculations might include other factors.

Understanding these steps and implementing them correctly will enable you to manage your shipping costs more effectively and avoid any surprising charges during the import process.

Step 5 - Consider other Import Duties and Taxes

Understanding the customs clearance process in Bangladesh when importing goods from the US goes beyond knowing the standard tariff rate. Businesses should be aware of potential additional duties that can impact overall costs. For instance, excise duty might apply on certain goods for promoting domestic industry. Moreover, Bangladesh, like many countries, may impose anti-dumping taxes to safeguard local industries from unfairly low-priced imports.

A practical example, albeit hypothetical, could be importing a car part from the US. The standard tariff rate might be around 25%, but an additional 20% excise duty could apply to protect the local automotive industry. Hence, the total payable duty isn't just 25%, but 45% of the car part's value. Note that these percentages are purely illustrative and the actual rates may vary.

Crucially, the Value Added Tax (VAT) is another aspect to consider. For Bangladesh, the standard rate is 15% as of writing, levied on the cumulative value of the product, freight, insurance, and any applicable duties. If our imported car part cost $100, freight and insurance were $20, and the combined duty was $45, the VAT would be 15% of $165 ($24.75).

These additional duties and taxes are important considerations when calculating the true cost of importing goods to Bangladesh from the US.

Step 6 - Calculate the Customs Duties

Calculating customs duties in Bangladesh when importing goods from the US gradates the complexity based on several contributing factors. These include the customs value of your goods, Value Added Tax (VAT), anti-dumping taxes, and excise duty—each playing a role in the total amount payable.

Let's consider three scenarios:

Scenario 1 - Only customs duties: If your shipment is worth $1000 with a customs duty of 15%, you'll owe $150.

Scenario 2 - Customs duties and VAT: With a shipment worth $1000, a customs duty of 15% and a VAT of 10%, your calculations are sequential: customs duty is $150 ($1000 15%), and VAT is $115 ($1000 + $150) 10% = $115. Total payable is $265.

Scenario 3 - All taxes: If there are also anti-dumping taxes and excise duty like $200 and 5% respectively on a $1000 shipment, your calculation continues from scenario 2, with anti-dumping taxes being constant and excise duty calculated as ($1000 + $150 + $115 + $200) 5% = $73.25. Total payable is $538.25.

Complexity grows with varied taxes which is where DocShipper steps in. We handle all steps of the customs clearance globally ensuring you only pay exact fees. Reach out for a free quote delivered in less than 24 hours.

Bill of Lading

Imagine the Bill of Lading as your product's passport. It’s an official document that secures the transition of your goods between the US and Bangladesh. Just as you can't travel without your passport, cargo can't begin its journey without a Bill of Lading. And thanks to innovation, you now have its electronic version, known as “telex”, offering a faster, eco-friendlier option.

With telex, you can discard worries about losing or damaging paper documents. An added bonus, it also simplifies air cargo shipments, where an Airway Bill (AWB) is used instead. While shipping, ensure you receive your Bill of Lading or AWB promptly. It proves ownership of the goods and is your ticket to a smooth customs clearance process. Strike the perfect balance—efficient, secure, and hassle-free.

Packing List

When navigating the complexities of shipping between the US and Bangladesh, getting your Packing List right can make all the difference. Imagine you're a shoe manufacturer, shipping your latest collection. Your Packing List is a concise manifest of the whole shipment.

It details the exact contents, right down to the total number of boxes, weights, product descriptions, and values. Accuracy is critical. A mismatch could derail your operations, causing costly delays. Whether it's by sea or air freight, this document assists customs in both countries to verify and process your cargo efficiently. The golden rule? Check thrice, ship once. Each time your cargo is precise, you step closer to a seamless shipping experience.

Commercial Invoice

Got a shipment headed from the US to Bangladesh? Securing your Commercial Invoice is non-negotiable. This document should outline crucial details - your goods' description, quantities, currency, total value, buyer and seller information. Think of it as the DNA of your shipment.

Missteps here could cause hefty delays in customs clearance, and nobody wants that. Make sure your Commercial Invoice matches with your other shipping documents. Mistakes like misspelling, inconsistent information across documents can be costly trip-ups. Custom officials scrutinize these details.

So, get it right the first time and save your business time and resources. Remember, the smoother your paperwork, the quicker the customs process. Ship smart!